Things to Consider When Buying New Construction

May 31, 2021

Buying New construction is a dream come true for most home buyers.  You have the opportunity to personalize your home for your tastes and preferences by choosing colors, finishes, materials, and lot placement.  While this is an exciting process, there are some steps to consider to make sure you are protected and the process is as smooth as possible.

The Contract

One thing to understand is if it is not in writing, it is not enforceable.  Any builder promises, even the obvious need to be in writing.  The contract is the first thing a court will look at if there is a legal dispute.

The most common area of disputes is what is, and is not, included in the building of your home.  You will often see a completely decked out and professionally decorated model which is a far cry from the finished product the builder delivers if you do not choose upgrades and structural options.  Know what is and is not included.  Ask lots of questions!

Be sure to read the Covenants and Restrictions for the community if any and understand how they apply to your situation. Read all builder disclosures carefully, the devil is in the details.  Ask questions if you do not know what something means or how it applies to you or your home. Understand what builder warranties do and do not come with your home.  This varies from state to state and builder to builder. Who is holding your deposit?  Is it in escrow or does the builder get to use it to build your home?  If the builder goes bankrupt is your deposit safe?

Choosing the Right Builder

Check a builder’s references. This is easier than ever with today’s online resources. Visit homes built by that builder and speak to homeowners in the community you are thinking of building in. Hearing from people who have already had a relationship with that builder is the best way to learn any common problems. A word of caution, the unhappy speak the loudest in person and online, so take these reviews with a grain of salt.

Your Finances

Make sure your finances are in order.  Many builders offer preferred lender financing and incentives to use it. Check with your banker and or the recommendations of your Real Estate agent to see if you are getting the best deal even with incentives.  Note:  often the builder’s lender will match competing lower quotes.  Ask!!  Also, understand if you become unable to qualify for the loan during the building process the builder may be allowed to keep your deposit under the terms of the contract, this is standard.  

Your Offer

Consider an independent inspection during critical stages of construction like pre-drywall and before closing.  You also may want to consider a Radon inspection.

Be realistic about the closing date.  While we all want to plan for exact dates this is not realistic in new construction due to many factors including availability to get building materials, labor-related issues, and of course weather.  Find out what your builder’s procedure is for keeping you informed throughout the building process.  Enlist the assistance of your RE agent, especially if you are out of town while your home is being built.  

Enjoy building your new home by being an informed participant in the process. 


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